Harbour Link Blog Archive

Container Terminal Operators at Port of Vancouver to Impose Reservation Fees & Penalties - Effective September 1, 2011

Posted 2011-07-15 by Harbour Link in opinion

How will this impact you and the cost of doing business at the Port of Vancouver? “Canada’s Asia Pacific Gateway”

On June 3rd 2011 Port Metro Vancouver’s Container Terminal Operators announced the implementation of reservation fees and penalties for missed and/or cancelled reservations. The new initiative is referred to as the Terminal Gate Compliance Initiative (TGCI) and its stated goal is to improve the efficiency of the container terminal truck gates for legitimate truck traffic.

We, along with others in the container trucking sector were first informed of the TGCI on May 18th 2011 at an information meeting convened by Port Metro Vancouver (PMV) and the container terminal operators. At this meeting stakeholders expressed concern about the impact the TGCI will have on the ports’ customers and questioned how this initiative alone would improve the current reservation system.

In a letter dated June 3, 2011, PMV and the container terminals operators informed all stakeholders that the initiative will be implemented on September 1st 2011 without further consultation with stakeholders.

All reservation fees and any associated cancelation penalties are to be paid by the truck carriers and their failure to do so will result in the truck carrier being banned from the port.

We have many concerns regarding this initiative and the impact it will have on truck carriers, importers and exporters and other parties engaged in the movement of trade via the gateway.

They include:

  1. The economic impact the reservation fee and associated penalties will have on the movement of containerized cargo by importers and exporters.
  2. The merits of how the reservation fee and penalties will resolve the existing reservation system issues that presently impede the transit of containers by truck.
  3. The cost impacts the reservation fee and penalties in their present form will have on the Ports’ stakeholders and the overall competitiveness of the Gateway.

The TGCI initiative places all of the accountability on truck carriers for service performance and the reservations they make on behalf of their customers. It also imposes penalties when a truck carrier changes or defaults on a reservation, yet there are no provisions for service performance on the part of the terminal operator to keep the reservations as accepted.

The impact of the TGCI for importers, exporters, 3PL providers and shipping lines is that the fee for each reservation and the penalties imposed for each cancelled reservation by customers will require these additional costs to be passed by the truck carriers through to their customers.

The standard business practice is for the trucking company to make reservations at a client’s request to meet specific vessel sailings and/or arrivals. However, due to changing dynamics of the supply chain that impact loading, arrival and cargo shipping schedules, changes and/or cancellations to previously secured reservations are frequently necessary. The vast majority of these changes are beyond the control of the trucking company and their clients.

Data accumulated by the trucking sector shows they are responsible for about 5% of all cancelled or missed reservations. The balance (95%), resides with other Port stakeholders.

Listed below are just a few of the reasons why reservations are missed or cancelled:

Container Terminal:

  • Delays waiting in line-ups to enter the container terminal due to internal terminal operating issues, which result in truck carriers missing the original appointment time.
  • Terminal gate line-ups and internal delays that affect a trucking company’s ability to complete scheduled reservations. Waiting time in gate line ups, results in drivers exceeding the maximum allowable “on duty hours” permitted by law under the National Safety Code, which all carriers must abide by.
  • Changes made by the container terminal to a vessel’s earliest receiving date (ERD).

Trans-loaders & Exporters:

  • Delays in cargo production and the arrival of shipments in Vancouver from Western Canada for stuffing into containers for onward delivery by truck to the container terminals as originally planned.
  • Unforeseen Sale or Letter of Credit problems that require reservations to be cancelled and the cargo re-booked when these issues are resolved.
  • The practice (need) for exporters to double book cargo with alternate shipping lines to ensure the availability of adequate ship space for shipments.
  • Steamship Line:

    • Lack of available empty container equipment to accommodate export shipments accepted as bookings.
    • The deferral of export shipments by rolling the booking of the shipment to an alternate ship / voyage.
    • The overbooking of ship space because of the high incidence of booking failures.

    As a responsible truck carrier we fully support a reservation system that improves the efficiency of PMV’s container terminals but we disagree with the imposition of the reservations fees announced as no justification for such a fee has been provided. Similarly, we are not opposed to the imposition of some form of accountability framework that would apply when a trucking company cancels or misses reservations due to service performance failures within their control that prevent the reuse of the reservation by other parties, providing the framework also includes a similar level of accountability on the part of container terminals for their service performance failures.

    We, as well as our customers, are very concerned about the adverse ramifications this initiative will have on the cost of doing business at the Vancouver Gateway. According to industry sources, it is estimated the TGCI will add about $12.5 million per annum to the cost of doing business at the Port of Vancouver with no reservation system improvements as a result of the initiative.

    We are working closely with industry associations and other stakeholder groups to lobby for a moratorium on the implementation of the TGCI until the completion of a study to assess the impact the TGCI will have on the transit of containerized cargo by importers and exporters and how the implementation of the announced reservation fees and penalties will resolve the existing reservation system issues that presently impede the transit of containers by trucks.

    RECOMMENDED ACTION PLAN: “ADD YOUR VOICE”

    Because of the unknown ramifications the Terminal Gate Compliance Initiative may have on the cost of doing business at the Port of Vancouver, the most important action to be taken at this late stage is to urge PMV to impose a “Moratorium” on the September 1st implementation date until completion of a comprehensive evaluation that includes input from all affected stakeholders of the cost and efficiency benefits.

    We believe such an evaluation should encompass the gathering of input from all sectors to objectively assess the economic impact the proposed initiative will have on the movement of containerized cargo by importers, exporters and other stakeholders. The evaluation should also validate that the imposition of reservation fees and penalties will resolve or substantially improve the existing reservation issues. See our blog entry titled, “The Growing Challenges of the Port of Vancouver Reservation System”.

    If you share our concerns, we encourage you to contact PMV to voice your concerns about the impact the TGCI initiative will have on your business and to advocate for the immediate imposition of a MORATORIUM on the September 1, 2011 implementation date until its cost impact and the operational merits have been fully evaluated.

    We will continue to keep our customers informed through our blog on issues that may impact your business both positively and negatively.

    Please continue to visit our blog on a regular basis to stay informed.